Agenda item

Report attached.

Members considered a report of Councillor Clare Pritchard, Portfolio Holder for Transformation and Town Centres, providing an update on the Levelling Up funded (LUF) town centre projects.

 

In the absence of Councillor Pritchard, the Leader of the Council gave a brief introduction to the report, including a summary of the achievements under phase 1 of the interventions, the appointment of a contractor for phase 2 of the work, some updated financial implications, timescales for completion of the projects and plans to keep market traders informed.

 

Approval of the report was not deemed a key decision.

 

Reasons for Decision

 

The Levelling Up Fund had been announced at the 2020 Government Spending Review to focus on capital investment in local infrastructure projects that required up to £20m of funding and built on prior programmes such as the ‘Local Growth Fund’ and ‘Towns Fund’.

 

In January 2022, Cabinet had given its formal approval in support of the Town Centre Stakeholder Board’s recommendations that the Council’s LUF submission should focus around the following three principal interventions, noting that at the time 2 and 3 were not in the Council’s ownership.

 

1. Redevelopment within the Indoor Market Hall and removal of the outdoor pavilions along Peel Street to provide an enhanced food and drink offering alongside traditional market stalls and new leisure offering – the intervention known as Market Hall.

 

2. Acquisition and external façade improvements/roof repairs to the properties of 43-59 Blackburn Road / 2-4 Church Street – the intervention known as Market Chambers.

 

3. Acquisition and redevelopment to the block 61-69 Blackburn Road to provide for a shared workspace offering – the intervention known as Burtons Chambers.

 

Acquisitions and Relocations

 

Following a delay until January 2023 in the funding announcement/agreement from the former Department for Levelling Up, Housing and Communities, (now the Ministry of Housing, Communities and Local Government), all the relevant land interests, (freehold and leasehold) within the Market Hall, Burtons Chambers and Market Chambers had been acquired through sale by agreements, although the Compulsory Purchase Order notice (CPO) for Market Chambers, would still be implemented to ensure a clean full title.

 

The Market Hall - Three leasehold rights had been secured from two traders in December 2023 and traders had started decanting into the temporary cabins on the town square from February 2024.  The Council had also supported a number of traders and small businesses to permanently relocate into privately owned or the Council’s own commercial units within the town centre.  New 12-month leases had been issued to traders on the town square from 1 April 2025.

 

Burtons Chambers - The freehold interest in the building had been secured in February 2023 and an early surrender of one of the two leasehold interests in October 2023.  Whilst the Council undertook/financially supported work to identify a potential relocation for this tenant, it had not proved possible to acquire the final leasehold interest.  However, the Council, as the landlord, might wish to review its options when this lease expired in June 2027.

 

Market Chambers - In total, six freehold and 25+ leasehold interests had been acquired across the properties 2-4 Church Street and 43-59 Blackburn Road, the first being secured in August 2023 and the last in July 2025.

 

RIBA 4 - Technical Design

 

All the design work for Market Hall and Burtons Chambers had been completed through the phase 1 contract.

 

Surveys for the external façade/windows/roof on Market Chambers were being delivered through separate contracts with the relevant design consultants, as the phase 1 contract had concluded.

 

RIBA 5 - Manufacturing and Construction

 

Morgan Sindall had managed all the works issued under phase 1.  Site cabins had been installed in the Market Hall compound from February 2024 and had been removed in June 2025.  This contract had included some additional works, following the strip-out, and some works brought forward from phase 2, as it was advantageous to the Council to do so. However, there were some works which were deemed more financially beneficial to move from phase 1 into the phase 2 contract.

 

The main works instructed under phase 1 had included:

 

• Assisting market traders to decant into temporary bespoke cabins or support in relocating to other commercial units in the town centre, creation of a trader/porter welfare facility and improvements to Peel Street Toilets
• All freeholder and leaseholder acquisitions
• Establishment of secure permitter hoarding
• Installation of Changing Places Toilet Facility within the Market Hall
• Complete all relevant condition surveys, inspections and intrusive surveys
• Full RIBA stage 4 technical, engineering and construction design works
• Demolition/alteration of existing structures, full strip-out on all levels, including safe removal of large quantities of asbestos and additional structural repairs required following strip-out
• Securing all relevant planning approvals, listed building consents highways and utility permits
• Stone façade cleaning, repairs and replacement of unrepairable windows to the Market Hall and replacement of all windows to Burtons Chambers upper floors (including associated scaffolding)
• Removal of shop frontages and installation of new foundations for the curtain walling system/windows to Burtons Chambers ground floor front façade
• Foundation and associated groundworks required for the erection of a new compliant staircase structure within Burtons Chambers
• Termination of all existing utility connections (70+) and move towards provision of new single water and electric utility connections (this included an upgrade to the substation on the market service yard)
• Procure operators for Burton Chambers, (Management Agreement) and Market Hall, (Property Lease)

 

The following work headings had been/would be instructed under phase 2:

 

• Full internal fit-out works to Market Hall and Burtons Chambers, such as floors, walls, ceilings, electrical, mechanical and ventilation systems, decorations, fixtures/fittings etc.
• Installation of a new damp proof protection system to two elevations in Burtons Chambers which were below the external ground level
• Re-covering to the roof of Burtons Chambers
• Further replacement of roof glazing, guttering and safety walkway to the Market Hall roof
• Installation of a Solar Photovoltaic system to the Market Hall roof including any repairs to the existing covering
• External public realm works to Peel Street (reduced scope from the original approved planning application, following extensive surveys which identified the proximity/quantity of utility services and river culvert)

 

By separate appointment with relevant consultants, work had commenced to undertake the necessary surveys, inspections, intrusive surveys to Market Chambers external façade/roof.  Whilst not within the phase 2 contract, there was the flexibility to vary in additional works to Market Chambers external façade/roof within the contract

 

There was no LUF funded work planned to the remaining leaseholder’s ground floor external façade to Burtons Chambers, although designs had been future proofed as far as possible so the space could be incorporated, the curtain walling system/windows and internal services extended into the redeveloped workspace if/when it became vacant.

 

Once the removal of the temporary market cabins on the town square was completed, it was likely some repairs would be needed to the existing paving.  At present it was unknown/uncosted and it had been agreed any repair work would be managed directly by the Council.

 

Monitoring / Quarterly update reports to Funders

 

Regular quarterly reports had been submitted to the grant funders as required.  The Council had always highlighted the initial 6-month delay in receiving the funding approval and within the last update to the funders in May 2025, the Council’s working assumption for completion date on the Market Hall and Burtons Chambers was Q4 financial year 2025/26.

 

On the 28^th August 2025, the Council had been pleased to welcome four senior funding officers from Ministry of Housing, Communities and Local Government (MHCLG) to view the town centre projects and who said,

 

“We are pleased with the progress made to restore the building fabric of both Market Hall and Burton Chambers, along with steps taken to accommodate displaced market traders.  The completion of the CPO process for the Market Chamber is good news and gives us reassurance that this project will be delivered, as envisaged.  We look forward to seeing work on the fit-out phase progressing and the Council realising their ambitions for these buildings and the wider town centre regeneration”.

 

MHCLG had asked the Council if it would consider becoming an exemplar case study to showcase the great progress and lessons learnt from the project.

 

At the end of the phase 1, the project cost consultants had reported £14,336,357 expenditure against £25,166,516 of available funding (£20,000,000 LUF funding, £3,666,516 from Hyndburn Borough Council and £1,500,000 of match funding from Lancashire County Council).  This left a remaining budget of £10,830,139.

 

Phase 2 (fit-out) Tender Process

 

The project team had initially received inquiries from twelve contractors following project publication notice in April.  Ten contractors had then submitted the required Procurement Specific Questionnaire (PSQ), which was a standardised set of documents introduced by the Procurement Act 2023 and superseded the previously similar Pre-qualification questionnaire (PQQ).  The project team had evaluated the ten submissions against the criteria for experience of working on heritage assets and contract values.

 

In line with the open and transparent procurement process, four contractors had been shortlisted as having the necessary skills and experience and had been invited to submit tenders in May 2025.  Three tenders had been received by the required deadline on 11^th July 2025, with one contractor verbally advising prior to the deadline they did not intend to submit a tender.  The project team had then undertaken the normal process of moderating,clarifying, and adjudicating the various tender submissions over a 4-week period, with submissions scored on Quality 60% and Price 40%.

 

Quality	Marks	Tender 1	Tender 2	Tender 3	Tender 4
Programme & Phasing	15	3	did not submit	5	14
Construction Methodology	5	3		0	5
Employers Requirements	10	3		5	7
Project Team Experience	10	7		10	10
Social Value	10	8		0	9
TOTAL	50	24		20	45
Multiplier	1.2	28.8		24	54

Note:

Tenderer 3 submitted their Construction Methodology and Social Value documentation after the deadline, so in line with the tender guidance, these could not be scored

 

 

Price	Marks	Tender 1	Tender 2	Tender 3	Tender 4
Adjusted lump sum tender price	40	0	did not submit	0	40
Detailed Preliminaries	5	0		2	0
Detailed Element Cost Breakdown	5	0		0	2
TOTAL	50	0		2	42
Multiplier	0.8	0		1.6	33.6

Notes:

Tenderer 1 price submission was incomplete, (single line tender figure) and did not include the required preliminaries book or cost breakdown, so these could not be scored.

Tenderer 3 submission was a non-complaint pricing document and an arithmetic check revealed a ‘doubling up’ of costs carried forward into the summary page.

Tenderer 4 submission did not include a preliminaries book, so this could not be scored.

 

 

FINAL SCORES	Marks	Tender 1	Tender 2	Tender 3	Tender 4
Quality	60	28.8	did not submit	24	54
Price	40	0		1.6	33.6
TOTAL		28.8		25.6	87.6

 

 

Following the tender evaluation/adjudication process and tender price adjustments to ensure all submissions could be assessed on a ‘like for like’ basis, with the project team recommending the most advantageous tender to the Council, scoring the highest in both Quality and Price submissions, was tender 4.  Tender 4 had been submitted by Krol Corlett who had offices in Liverpool, Manchester and Preston, and were very experienced in working on the redevelopment of heritage buildings and fitting out for commercial activities.

 

Further provisional sum adjustments relating to the agreed scope of works had been added to Krol Corlett’s tender price and an agreed phase 2 contract signed to the value of £10,533,657.  Two areas of increased costs highlighted during the tender process / contract negotiation alongside general inflationary costs was the extended programme, which required additional client professional fees, temporary trader cabin hire etc. and an additional risk allowance from the contractor relating to the existing building structures and works undertaken by the phase 1 contractor.  The phase 2 contract cost plus the phase 2 client fees/costs gave a total phase 2 cost of £11,080,159.  This was a budget pressure of £250,000 against the available budget of £10,830,159 and was circa 1% on a total overall phase 1&2 project cost of £25,416,516.

 

The project team had recommended that the Council should hold an additional ‘Client Contingency’ to address any unknown costs that may arise during the remaining phase 2 works or to cover any Council driven variations or additional work requests.  A prudent level of contingency would be to hold 5% of the project budget.  Given both the budget pressures and wider project risks, this would require a budget of £500,000.  It should be stressed that this funding was not part of the phase 2 contract but was a client contingency which might or might not be fully utilised.

 

At the time of writing the report, the contractor’s programme had showed a working assumption that the works to the Burtons Chambers would be completed by 6^th July 2026 and the Market Hall by 13^th July 2026 (RIBA 6 – Handover).  Whilst the assumption provided for Burtons Chambers to be completed first, the Council had requested the contractor to consider completing the Market Hall first, to allow for the temporary cabins to be removed at the earliest opportunity.  Discussions would continue with the contractor to understand if there was any opportunity to bring this date forward.

 

The Council would be liaising closely with the operators around these dates to understand the work/timescale they required for testing, soft launching and when their offerings would be fully operational and also liaising with the market traders who had been temporarily relocated onto the town square (RIBA 7 – Use).

 

Operators

 

The new operator for Burtons Chambers, 2-Work, had signed the Management Agreement and had set up a dedicated email address (burtonschambers@2-work.co.uk) where local businesses, entrepreneurs, residents, could register an interest in taking up space in the building when it opened.  A report to Cabinet in March 2024, had approved the allocation of £450,000 to cover any shortfall in the first 2 years’ net operating income for the shared office/workspace management agreement that the Council had signed.

 

At the time of writing the report, the property lease for the Market Hall was still to be signed with the Council’s preferred new market operator, Northern Lights Group Limited.  Now that the final design had been priced and included within the phase 2 contract, signing the Market Hall lease would be the next milestone to achieve by the end of October 2025.

 

Once the redevelopments were complete, the Council would retain responsibility for maintaining the Market Hall and Burtons Chambers building structure/fabric and potentially internal mechanical and electrical (M&E) in the Market Hall (discussions on the lease with preferred market operator was still ongoing).  At the time of Cabinet approving the LUF submission in March 2022, Cabinet had been informed of the need to create a suitable maintenance budget and staffing structure given its responsibilities as a landlord/obligations under the management agreement with 2-Work and property lease with the preferred market operator.  This would need to be considered as the Council updated its Medium Term Financial Strategy.

 

Funding/Costs

 

The Council’s LUF bid submission had included levels of contingency/inflation/risk circa 30% of the project budget and the project team noted that here had been and continued to be cost pressures on delivering the projects.  These ranged from unforeseen and additional work not included at the bid submission stage, hyperinflation on construction materials, high levels of inflation/wage increase, works undertaken out of sequence, increased costs of working on Grade II/Heritage buildings and additional land acquisition costs not included in the bid submission.

 

Even with the levels of contingency/inflation/risk highlighted above, the project team had been required to undertaken two separate value engineering exercises.  These had driven efficiencies and best value out of the project, whilst still achieving the required outcomes/outputs.  In addition, the Council’s procurement strategy had agreed a 2-stage Design and Build procurement route with the works split into two phases. - phase 1 undertaking enabling works and phase 2 fit-out works.  This decision had helped to deliver further best value for the public purse.

 

There were works which had been identified since the original LUF bid submission, which the Council could consider undertaking whilst the redevelopment work was taking place or recognise and note it as future maintenance works.  In addition, there was other work suggested by the preferred market operator as a ‘like to have’ but none of this work had been included in the phase 2 contract.

 

The current development phase work for Market Chambers was being funded through a National Lottery Heritage Fund grant (Heritage Fund) together with match funding from the Council.  During this development phase, internal designs would be concluded following a long period of community consultation and a delivery phase bid was likely to be submitted in May 2026.  If successful, the internal redevelopment work within Market Chambers would be undertaken through a Heritage Fund delivery phase across the financial years 2026/27-2028/29, dependent on the heritage funding start date.  At the time of the initial funding submission in August 2023, the delivery phase would be funded through the remaining Heritage Fund grant plus Council match funding, to provide for a total construction budget.  It should be noted that the estimated construction costs from the initial bid were of course subject to change as the designs were yet to be agreed and any tender for the works was 12/18 months away.  The external façade/roof works were not funded through the Heritage Fund or remaining LUF funding and would need additional Council funding or other external funding.

 

Levelling Up Fund (LUF) Process Evaluation – Phase 1

 

In 2024, the Ministry of Housing Communities and Local Government commissioned SYSTRA and Frontier Economics to undertake a two-phase progress evaluation of the LUF fund.  The Fund had awarded £4.8bn for local authorities to invest in local infrastructure projects, which focused on regenerating town centres and high streets, upgrading local transport, and investing in cultural and heritage assets.  The funding had been awarded in three rounds following a competitive bid process.

 

The report presented the findings of the first phase evaluation carried out between March and November 2024.  It provided emerging evidence and lessons learned on the efficiency and effectiveness of awarding funding under Rounds 1 and 2 of the Fund, with initial insights on Round 3.  This was intended to provide learning to support current LUF projects as they continued their delivery, provide evidence to shape future policy, and inform phase 2 of the evaluation (to be carried out between 2025 and 2027).  All findings presented were preliminary and subject to change following more detailed work in phase 2.  (A link to the MHCLG report was provided within the Cabinet report)

 

The report had recognised that there were areas of good working relationships between authorities and funding officials.  However, some of the main concerns found had included:

 

• The previous Government’s desire to launch the Round 1 Fund rapidly created time pressures which impacted its launch as well as the development of bids.  By Round 2, changes had been made to the application and assessment processes, although these had mixed effectiveness.
• Local authorities generally did not have eligible well-developed schemes available, (‘on the shelf’) which affected the pace at which project delivery could begin.
• 92% of projects submitted were only at conceptual/planning stage or preliminary design phase, with only 3% construction ready.
• There was a delay in opening the application portal.
• Many authorities acknowledged the tight delivery timelines stated in the funding guidance and felt this was ambitious given the processes involved, level of spend and where it involved complex regeneration project/s, which was particularly overambitious for listed building projects.
• There was a delay in making the funding announcement.
• There were delays / additional work involved for authorities in demonstrating project compliance with the new Subsidy Control Act 2022, which came into effect on 4^th January 2023, (prior to the funding announcement) and the new Procurement Act 2023, which came into effect in February 2025, (prior to the phase 2 fit-out works tender process).
• Almost all, (95%) of projects, were experiencing delays relative to timelines in their bid submission, largely due to delays before construction.  Of these, 57% were delayed for up to a year, 38% delayed over a year and 6% delayed more than 2 years.
• The length of time needed to secure land acquisitions and/or planning permission/listed building consent was highlighted in project delivery delays.
• Unexpected costs, hyperinflation of construction materials, COVID 19, the war in Ukraine and lack of market capacity, were the most significant factors in increased costs/timelines to project completion.
• Supply availability varied across the country, with access to skilled contractors and experienced project managers recognised as being crucial for the delivery of ambitious infrastructure projects.

 

There were no alternative options for consideration or reasons

 

Resolved                                    -    That Cabinet:

 

(1)    Notes the Town Centre Levelling Up funded project progress update, as set out in the report;

 

(2)    Notes the financial pressures and additional resources needed to complete the Market Hall and Burtons Chambers as set out in Paragraphs 3.4.2, 3.6.4 and 3.6.5 of the report; and

 

(3)    Agrees to allocate funding from Council reserves to meet the project budget pressures and project team recommendation for a contingency as set out in Paragraphs 3.6.4 and 3.6.5 of the report.